SmartTranscript of House Energy and Digital Infrastructure - 2025/01/21 - 1:00pm

[Speaker 0 ]: Madam chair, airlines. [Chair ]: Alright. Welcome, everybody, to the January twenty one meeting of the House Energy and Digital Infrastructure Committee. We are here with the chair of the PUC, Ed McNamara. And as per our custom, we will we'll quickly go around the room and introduce ourselves. Mhmm. We like folks in the room to introduce theirselves and who they're representing, and then we'll allow you to introduce yourself for the record. And I just wanted to mention that we are a committee who likes to ask a lot of questions, and we are a hard stop at two fifteen so that we can take a little break and get to another meeting that we have at two thirty. So alright. So I'm Kathleen James from Manchester. [Scott Campbell ]: Scott Campbell from St. John's. [Ed McNamara ]: Birch Bailey from Hyde Park. [Speaker 0 ]: Chris Morrow Westin. Michael Southworth, Caledonia two. Christopher Howland, rattling four. Gary Torrey, Washington two. [Ed McNamara ]: Graham Kloepner, Burlington. Jonathan Walter, Primer Piper in the room on behalf of the electric department. And also the power supply authority and the small independent company, Seth Franklin. And let's switch off. Please head to your mic. [Chair ]: Great. Mike Murphy in the room on behalf of Dan and Martin. [Ed McNamara ]: Jeremy Little in the room on behalf of [Chair ]: the Vermont Chamber of Commerce. Jacqueline Fraser on behalf of Morang Strategy. [Ed McNamara ]: Peter Sterling, Renewable Energy Vermont. [Chair ]: Alright. [Ed McNamara ]: Great. Ed McNamara, chair of the Public Utility Commission. This is Jack Caddy. I emailed you a link. Great. Thank you. Apologies for monitoring this. [Chair ]: No problem. Thank you for being here. Actually, as long as we have a minute. Bjorn, are you representing a particular client today? Not that I'm well, I'm sure I am. Sorry to forget his file. [Ed McNamara ]: Yeah. I'm just new too, so [Chair ]: I don't know. That's where I'm at. So I'm sure I am, but I don't know who it is. Great. Well, I'll take a lot of notes on this. Laura, Sydney, have? I went to Alright. You're just waiting to get the slides up. Jack, can you just share it from the website? Is that easier or no? [Scott Campbell ]: Nope. Here you go. Alright. [17 seconds of silence] [Ed McNamara ]: Sorry about that. [Chair ]: No problem. [Ed McNamara ]: Alright. So I'm gonna provide a quick overview. Well, maybe not so quick. I'll try to provide a quick overview. Who we are, what we do, industries we regulate, and some general principles as well that sort of inform all our regulatory thinking. So quickly, who we are. Just for context, every single state has some version of a PUC. The name is gonna be different in almost every state and the structure and the jurisdiction. For example, Washington state, excuse me, regulates ferries. Massachusetts had a really large proceeding all about Uber and whether it should be regulated because they regulate they have some regulation of taxis. So I'll talk about what we do, but it's it is gonna be different in every single state. So why do we actually have this? Why do we have the structure of PUC monopoly utilities? And the underlying concept is that they need to regulate it to promote the public interest. [Chair ]: It's okay. Too quiet. So [Ed McNamara ]: railroads. We actually started as the Vermont Railroad Commission in eighteen fifty five, and then we didn't really start regulating electric utilities until early nineteen hundreds. Historical side note, if anyone's a environmental history nerd, George Perkins Marsh was one of the earliest realtor commissioners. Grain style seems like a random thing to put on a slide, but that was the first time when the US Supreme Court stepped in and said that businesses that are affected with the public interest should be regulated. They're not just every other commercial interest. That was eighteen seventy six. So brain silos are actually some of the first regulation we've actually had in the first monopoly. Yes? [Chair ]: So the definition of utilities feels very broad to me? [Speaker 0 ]: It's extremely broad. [Ed McNamara ]: I'm sorry. Brain silos wouldn't have been considered a utility necessarily, but they would've been considered monopoly and therefore Okay. Effectively regulated. So [Chair ]: That's really interesting. [Ed McNamara ]: Yeah. I didn't dig into difference between utility versus monopoly. [Chair ]: I mean, there's No. That's okay. I I just it just caught my eye. It's so I'm I'm a history buff. So That's the question. Yeah. For Sebelia, who decides? [Ed McNamara ]: Who decides what we regulate? [Scott Campbell ]: Yeah. [Ed McNamara ]: You folks too. [Chair ]: Thank you. [Ed McNamara ]: To a large degree, I'll get into caveat about federal government in a little bit. K. So we really started off as just a bunch of economic nerds. Economic regulation is all we did. And in some states, that's all PUCs still do. Most of the country, though, a lot of the states started evolving. So they took on the broader sort of non economic regulation components. Renewable energy standards is one great example. But even before that, in the nineteen eighties, Vermont PUC started looking at environmental externalities and accounting for environmental externalities when they looked at power supply mix. One other, to me, important distinction between us and most other state PUCs, we have a much more significant role in siting generation than almost any other state that you see. I was talking to a colleague in Massachusetts, and they only get involved in it was specifically solar, siting. If it's at least a hundred megawatts, we have nothing anywhere close to that. Twenty megawatts is our large largest solar, so it wouldn't regulate anything. At least what we have in our state. Again, every state varies, and that's decision of the legislature. So quickly, there's three commissioners, staggered six year terms. In terms of appointments, we're all reviewed by judicial nominating committee, appointed by the governor, confirmed by the senate. We have a clerk's office, or our clerk, is responsible for communicating with all the parties in cases. I'll talk a little bit about ex parte communication later. She's got a deputy clerk for administrative staff, and we have hearing officers. They're the ones who actually do vast majority of our cases. We have a couple hundred cases at any given time. And, typically, it's these hearing officers who do the bulk of that work associated with the case. Eight attorneys, seven analysts. And then we have director of operations and business manager, something I forgot to put on the slide. Our director of operations was instrumental in creating something called the EPUC. It's a case management system. I'm not gonna say it's the most intuitive system. There's no such thing as an intuitive case management system, but it is possible for anyone who wants to be able to log on and see all the case files electronically very easily if you have the letters. [Chair ]: Rep. Sebelius? Yeah. Madam Chair, actually, all the years I've been on the energy committee and heard PUC one zero ones. I don't know that we've ever done a walk through of the PUC, and I think that might be helpful at some point, both the committee and for the public, to just understand how to log on and how to navigate that system. I don't know if that's something that I mean, there's a lot there in terms of work on. Comment and Sure. If you'd be willing to come back sometime and I I think it might be interesting. Let us know. [Ed McNamara ]: Yeah. We I'm saying we, not me. Definitely, not the best person to do it. So we have some of our folks who will be looking at it. We can definitely do that. [Chair ]: Exactly. That'd be interesting. Thank you. [Speaker 4 ]: Great. So [Ed McNamara ]: funding. Most of our funding comes from gross receipts tax, and this is paid by the companies that we regulate, represents ninety three percent of our budget. We get relatively small amount through application fees. So anybody who develops, I should say, merchant generation and merchant store. So the electric utilities pay the gross receipts tax. So if they're building a solar project, they don't pay the application fee. The application, they're funding us through the gross receipts tax. So the application fee is paid for by developers of generational storage. It's about six percent of our budget. Build back is just a fancy term of if we have some one off cases and we have a court reporter, we tell whoever filed that petition you have to pay for the court reporter. So we pay the upfront cost and bill back the petitioner. Relatively small dollar amounts overall of less than one percent. Another factor as well is that electric usage, gas usage, pretty much everything fluctuates over time, mostly depending on weather. And so that means our revenues are fluctuating over time. So we have a reserve fund that we're able to sort of cushion as well. Otherwise, we that's interesting budget issues. We are not funded through general funds. The one time exception was for one fiscal year for three staff associated with clean heat. That was the only time my time I received general fund for staffing. Apologies. Did you have department of public service come in and provide an overview? I can't remember. [Chair ]: Kind of. Okay. We're gonna do we're gonna have a do over on that. Alright. [Ed McNamara ]: So this is just really to explain a little bit of the difference. We're quasi judicial. We're independent of the administration. And then I'll talk a little bit later about what the judicial and legislative means, just sort of what our functions are. And then, Vermonters participate in proceedings before us. The same from Department of Public Service that is an executive branch agency, they represent the public interest in all proceedings before us. They also do long term planning both on energy and telecommunications. They work with customers to resolve complaints before they come to us. And they also have a role interacting with US Department of Energy, which has been particularly significant in the years of IRA and other federal funding. So moving into what we actually regulate. I gave that caveat about, generally, you folks get to tell us what to do unless the federal government says otherwise. So we're responsible for retail rates. Retail is just end use customers. So each of you is an end use customer. Your electric bill, that's the retail. We're responsible for overseeing any distribution planning. Mentioned earlier setting generation, and we also set transmission even though we have limited rate regulation over the transmission costs. We're responsible for siting if it gets built. And then generation portfolio, what I really mean here is what's the makeup of what kind of generation do we need to have? Like, specifically, it's renewable energy standard. You're essentially the legislature has told the utilities we want x amount, you know, this type of generation, y amount of this type of generation. That's something that states have always had control over. On the federal side, wholesale rates, and this is primarily whatever the prices the utility pays to generation or to transmission owners. So that's wholesale. Federal Energy Regulatory Commission are the ones who are responsible for everything on the right side of the page here. Transmission planning, you're gonna hear, I believe, later this week from ISO New England. They actually administer the transmission planning, but they're regulated by the Federal Energy Regulatory Commission. Transmission costs are also regulated on the federal level, and prices paid to generation with some significant caveats I'm gonna move to next. [Chair ]: Can you explain that a little bit more, prices paid to generation? [Ed McNamara ]: Yeah. So, actually, if you can Sure. Let's jump right to the next page. So what I mean by price of page two generator is if you have a twenty megawatt solar project and they have a contract with Connecticut Utility, even though the facility is located in Vermont, the price that the Connecticut Utility pays to the twenty megawatt generator is actually theoretically or is regulated by FERC. The way that FERC does regulation, though, of generation prices is they have a wholesale market. So they let the market effectively set FERC oversees the market rules. FERC, New England administers the prices or sorry, administers the market, and generators typically receive whatever prices come out of that market. Really important caveat though, a large portion of generators have long term power supply agreements. So in other words, the contract for twenty, twenty five years where the price is not set by the market directly. It's the utility and the generator agree. We're going to get eight cents a kilowatt hour for every every kilowatt hour that we produce over twenty five years, some kind of escalators, you know, those kind of things. So a lot of what we see nowadays, especially on the renewable side, are long term contracts. The price that is set, though, or the price in the contract typically dovetails with the expected wholesale market prices. [Speaker 4 ]: So [Ed McNamara ]: in other words, the utility isn't going to pay twenty cents a kilowatt hour for a solar project when they know if they went into the wholesale market, they could get the same power for five cents and then the renewable energy credits on top. Sorry. This is digging in deep. So ISO New England is going to present I what I suggest is have them dig into that piece. I'm happy to come back later and provide some real world examples. [Chair ]: Okay. [Ed McNamara ]: But we could easily spend I'll just say that my job for a couple years, I spend probably about twenty hours a week working on wholesale market, and it is a ridiculously dense subject. [Chair ]: Okay. I'm [Scott Campbell ]: working without getting dense about it. I'm just wondering about you decided that for set the market rules, and I said New England administers that they're basically setting the prices for generators. But in state generators for power that's used in states, is is that true for that as well? Or is that [Ed McNamara ]: This is the next piece. Okay. Okay. Next next part of the slide here. There's two exceptions to when the state can actually regulate Yeah. Or set the prices based generators. First is net metering. And the reason for that, that's usually federal government usually gets involved with interstate commerce. With net metering, theoretically, if you produce power here, it's actually used. Right? That is what that's the underlying concept. And so it never becomes interstate, entirely interstate ratio. And PERT has specifically said we're staying on a revenue ring. That's up to you states. The other is qualifying facilities. Again, this is a little getting in the weeds. There is Public Utilities Regulatory Policy Act. Late nineteen seventies during the oil crisis, Congress US Congress looked at ways to reduce reliance on oil. And so what they essentially said is utilities, you have to open up your transmission assets. Let any of these merchant projects, which were still fairly new back then, interconnect into your transmission system as long as they're cogeneration, so more efficient, or renewable. And there's a size cap of and at this point, it's twenty megawatts effectively. So standard offer program is essentially a purpose compliance program, and that's why we are able to set the prices. K. Great. Yeah. [Scott Campbell ]: Do you want any deeper than that? Alright. [Chair ]: But there's a quiz. [Ed McNamara ]: Just on acronyms. Mhmm. Alright. I'm gonna talk a little bit now about what the sectors that we regulate, and I'm just gonna try to fly through this fairly quickly in terms of what we actually regulate because there's a lot. So electric sector, I should also do a disclaimer. I am an electricity nerd. I've been doing this for a really long time. When it gets to telecom, I know some folks have particular interest. I know Maria Roy Boyle Mhmm. Who's gonna be talking later as well. I'm happy to have the folks who are really good at that from my shop come in. It's not gonna be me. I'm gonna be focusing much more on the electric side because what I know really well. So tariffs. Tariffs is just a fancy word for the offerings that utility provides. So you all take service under tariffs, probably residential one tariff, And that simply sets the it's both the rate that you pay, roughly twenty cents kilowatt hour, and the sort of green mount power, and also the terms of service as well. So that's the NGS customers. And then there's a tariff for net metering rates as well. The utility offers net metering through a tariff. Mentioned before siting, interconnection is slightly different. It's usually considered within the same bucket, or it's often considered at the same time that we do siting generation or transmission. But we do have a separate interconnection rule that essentially says, if you're interconnecting your generation or storage or whatever it is into the system, you cannot do damage to the system. And so, therefore, here's what the utility is required to ask you, the developer, to make sure your system or your generation is not gonna impact negatively impact the system. I'll talk a little bit more later about energy efficiency services. Even though we have efficiency Vermont, technically, it's the electric utility. It's the distribution utilities that are required to provide by law, they're required to provide energy efficiency services. Efficiency could have a modest taken on that level for them effectively. I'll mention a little bit more about integrated resource planning. And then disconnection rules is essentially when a utility can disconnect a customer for nonpayment. There's certain rules around that. It can't be during severely cold weather, for example, and there's a certain process that we have for somebody who has a doctor's note. How many times can they use a doctor's note to avoid disconnect before we say no on that? Yes. [Chair ]: If you're gonna talk about this later, just tell me. I I I would be interested in just a little bit of insight into how you guys make your decisions on-site, how that works, you know, certificate of public good, your criteria. I would just it comes up so often in my Yep. Yeah. [Ed McNamara ]: I do have two slides on it a little bit later. So and on any of this, recognizing we don't have infinite amount of time, if you folks have specific issues you really want me to dig into, I can bring the right people, and we can come back. [Chair ]: Okay. [Ed McNamara ]: Or you can just call me, reach out. Happy to answer questions. Great. Natural gas tariffs are very similar in terms of for the electric side. It's pretty paid by the end of this customer. They also have to do integrate resource planning. They have to do energy efficiency disconnects inside. So I usually lump natural gas and electric together in terms of the regulation looks very similar. Telecommunications is where we start sort of diverting a little bit. So we have limited regulation, regulatory authority in telecommunications. And this is I actually can't wait to see what Maria says because she knows this better than I do. And, by the way, we do have folks that are really good at this. So my ignorance does not reflect the POCs. Just [Speaker 0 ]: be really clear. So what's that? I said, that's good, mister King. [Ed McNamara ]: So we regulate service quality, including outage and repair times. We also do something called we designate eligible telecommunications companies. There's universal service fund. This helps to support what's called the Lifeline program for low income Vermonters so they can access basic telephone service. We're also responsible for setting cell towers as well. In terms of a lot of other typical things on telecommunications, we have very limited regulatory authority when it comes to wireless providers, broadband, and Internet service providers. And that largely reflects the fact that those services are heavily. There's a lot of statutes at the federal level around that, and those those federal statutes are really aimed at trying to create a competitive environment and ensure a competitive environment for those services. [Chair ]: Yes. Nope. You go. [Speaker 4 ]: Can you just repeat what you said about low income Internet customers? You have regulatory authority. [Ed McNamara ]: You did not Services, telecommunications. So consolidated basic telephone service. Oh, okay. There is support for customers with low income to be able to access basic telecommunications. It was a separate program for broadband. It's not something that we have ever regulated. [Speaker 4 ]: K. Thank you. [Chair ]: And so telephone and broadband are [Speaker 0 ]: not the same. That's correct. Right. Yep. So [Ed McNamara ]: Yes. [Chair ]: This is back a couple slides. I'm really sorry. It's okay. So you regulate electric rates. Yep. And I saw you regulate natural gas. [Ed McNamara ]: Yes. [Chair ]: So BT gas? [Ed McNamara ]: PGS. Yep. [Chair ]: But you don't regulate any others you don't fuel heating fuel is not regulated. [Ed McNamara ]: PUC does not do any great regulation of any heating fuel except for natural gas. Okay. Cool. Department of Public Service has some safety. It regulates some safety associated, I think, with propane delivery, and then agency natural resources has some regulation over storage tanks, for example, to prevent leaking, things like that as the environmental focus. [Chair ]: Gotcha. Okay. [Speaker 0 ]: Go ahead. [Ed McNamara ]: Would that be because it's not an infrastructure in the ground that services areas? Is is that the main reason? Yes. It's an interesting question because Vermont Gas has often said that they are not really a monopoly because people can switch to propane. They can switch to oil. Be interesting to sort of dive into that history. I haven't looked at any of those orders in a long, long time, but I think it's largely because Vermont Gas has the pipe. And therefore, they're the only ones who can access that pipe. Theoretically, you can even if you have oil or propane, you can go to different heating providers that provide just oil or just propane. So you're not sort of stuck with one delivery person or one fuel dealer. [Speaker 0 ]: Thank you. Yes. I'm sorry. Two questions then. In the case of a gas pipeline, in multiple producers produce into common gas line, such as owned by Mont Gas and then separate I think it measured in terms of the quality of gas and then separated out of the the other end of that type of regulation. [Ed McNamara ]: It's theoretically possible, and I know that at least in Vermont, we have one farm methane producer that provides gas into PGS's pipeline. I think there might be one additional coming online soon, but so that's on one end of the system. I don't know actually, I'm not even sure if anywhere in New England allows you to have that sort of competitive any similar to use of telephone lines, for example. You can I don't think I've seen that one? [Speaker 0 ]: So the old Love and Gas systems that were very they are none of those left in Vermont where they would gasify coal or or some other product. They're they're not I don't know of any [Ed McNamara ]: of that. I don't believe there are any left. So I know there's one in Bay Area, but then there's a couple others, but I believe there's a mostly gone at [Speaker 0 ]: this point. And then the on the telecommunications, that's solely the wired telecommunications industry and nothing to do with any other means of [Ed McNamara ]: That's correct. We don't do this to the wireless provider is AT and [Speaker 0 ]: T, Verizon Wireless. We're all hardwired. I think we probably consolidated. Consolidated. Yeah. There [Ed McNamara ]: and then Shoreham Telecom. There's a couple of telecom wire telecommunications companies in Vermont that we regulate. [Chair ]: What's the value? Do you do you regulate fiber or DSL? [Speaker 0 ]: We do not. Right. Just copper Well telephone. Right? [Ed McNamara ]: Sorry. If consolidated telecommunications company provides service over fiber telecommunication service over fiber service. Phone service rather than copper, then we would still regulate that service even though they're providing telecommunications and potentially broadband [Speaker 0 ]: over that same fiber. Right. [Chair ]: So if they if they provide broadband over that fiber, you can regulate that you can regulate that. You can't regulate that broadband. [Ed McNamara ]: We cannot regulate that. Is that a just state restrict I'm sorry, ma'am. [Chair ]: It's fine. [Ed McNamara ]: Is that a state restriction or a federal restriction? I believe that is mostly federal. That's something that I'm more than happy to get. We have one or two folks who are really good on telecom regulations coming in. [Scott Campbell ]: Go ahead. [Speaker 4 ]: Great. [Chair ]: Great. Go. Go. Go. Go. Go. [Ed McNamara ]: Go. Right. It's a lot of work. Fidium, would that be under will that be under your purview at some point? I would not expect that. And so FITIAM is consolidated, provides telecommunications service to a large portion of Vermont. FITIAM is their broadband provider, and we typically do not regulate broadband. There's some federal preemption issues that I don't know well enough to [Speaker 0 ]: be able to start speaking intelligently about right now. [Ed McNamara ]: Thank you. [Chair ]: Okay. Onward. [Ed McNamara ]: Great. Cable television. So we we provide we essentially grant franchises. So Comcast, we granted the franchise as a handful of other small cable companies as well. We regulate service quality and the disconnection requirements. We also do the public education and governmental or peg channels. So So we set the funding and also some technical requirements around that. We don't regulate the cable television rates. We believe that is, again, a function of federal law, and we do not regulate what channels are being offered to customers. So we have heard requests to regulate, surprisingly. [Chair ]: Yeah. There's that after hearing from a very angry constituent a couple of years ago. Yep. Something about a football game. Yep. So if you know franchises effectively No. No. Yep. You're not able to regulate on rates or consumer protection items, and that's because it's federally preempted. [Ed McNamara ]: That's my understanding. Yes. And I we are able to regulate service quality to some degree. And, again, the Nuance is going to be a little bit beyond me at the moment. So we also do not regulate satellite television, YouTube TV, any of that still either. So, again, we get calls on that, but we don't actually regulate it. Manager? Same [Scott Campbell ]: separation here on the same front end. If if cable is carrying a broadband service, [Ed McNamara ]: we do not regulate that. Not broadband. [Scott Campbell ]: There's no regulation of that just like any any telephone. If it's coming over a fiber, we're regulating the telephone rates and quality but not any broadband. [Ed McNamara ]: Yeah. For example, Comcast has Xfinity, which is a wireless provider, I think, or sort of a and also broadband. Or maybe it's actually not a wireless provider. I think it's a wireless provider, and they also use their own broadband as well. I've never quite understood it. So we regulate some degree Comcast cable service offerings and very little [Speaker 0 ]: Yeah. If anything on the other side. K. Wow. [Ed McNamara ]: And I again, I just wanna point out there's a lot of nuance in here, and Marie, well, knows it very well. And I've got a staff attorney who's excellent at it as well. So to the extent you wanna dig in, [Speaker 0 ]: just let me know. Right? [Ed McNamara ]: Water systems, this actually used to be more significant when I started the first started the PUC back in two thousand two. We only regulate private water systems. So municipal municipal systems and what you call fire districts. Fire districts are basically co ops. We don't regulate those. We only do regulation. We don't really do quality of service there. That's Agency of Natural Resources primarily because they're regulating under Safe Drinking Water Act. So from EPA down to ANR, and, really, the quality comes in on the [Speaker 0 ]: same thing as water plants. [Ed McNamara ]: Yes? Could you define, like, private water system versus municipal system? Yeah. So if you actually have a if you have a housing development where you put in about twenty house houses or something and you're far enough away from the municipal water, the developer would have put in their own water system to their own pipe hanging, their own pumps, things like that. It's actually more common than I personally. So [Speaker 4 ]: you know? Yeah. Yes? [Speaker 0 ]: If they become a fire district, they become, like, a little sub village of water system, basically. And and then you have Woodstock is in was in the news where they were a public water supply. They're public A private. A private company. And once they go public with they're they're bought by the municipality, you lose all the time. That's correct. Yep. Alright. So [Ed McNamara ]: I'm gonna focus on general principles about regulation. I'm doing three most significant to me that I've seen come up the most over the years. Lease cost planning. So generally, first, you ensure that safety. And I'm thinking in particular, electric and natural gas are the two main utilities that are subject to lease cost planning. In per statute, the only one that's subject to lease cost planning. So you ensure that the provision service is safe and is reliable. Quick side note, the definition of reliability has been changing over time. It used to be you just sort of accepted that. It looks like that's less and less acceptable. And now with major storms, how much does the utility need to do to prevent major storm or just destruction of infrastructure from major storms? So I put it in here as sort of a throwaway, and it's not. There's a lot of issues associated with reliability. But, generally, when we talk about lease cost planning, it's meeting the need for energy services, electric or natural gas, at the lowest cost. Here, when we just define cost, though, it includes environmental costs as well. So you have to factor in, and SAGI specifically talks about greenhouse gas emissions and then cost of climate change. So when we say lowest cost, it's not it's not like we don't care about the environmental aspects. We're actually incorporating that into the definition. So statute requires all the electric utilities and Vermont Gas to do an integrated resource plan at least every three years. So that is, like, effectively saying, here's what we're gonna do to provide service to our customers over the next ten to twenty years. Theoretically, it's twenty years, but we really look at it the next ten years. [Chair ]: Can you just one more time. The integrated resource planning Yep. It's every three years. They have to do a plan that goes out twenty years. Yes. And you have to improve them? [Ed McNamara ]: We have to improve integrated resource plan. I will also say that difference oh, there's a fair number of other states that have this kind of requirements, and different states, the statutes are very different. I was talking to a commissioner from Missouri a while back. He said integrated resource plan proceedings are their most significant proceedings. Everyone shows up because the utility cannot build anything unless it's specifically enumerated in their integrated resource plan, and they're very strict about that. They can't incur additional costs unless it's in their integrated resource plan. We do not have that same level of, I was gonna say, rigor, but it sounds like we're we don't hold our utilities to that same level. In other words, if they think of something that's actually benefits ratepayers and it wasn't in their IRP. Mhmm. If it makes sense [Speaker 0 ]: to us, we'll let them do it. They have to [Chair ]: propose it to you. [Ed McNamara ]: They would have to propose [Scott Campbell ]: it. Yeah. [Ed McNamara ]: Another important aspect of lease cost planning, you have to look at all available, reasonably available alternatives. And what we try to do here is the balance of resources. You don't want hundred percent of the resources to be the lowest cost because then you turn into reliability issues, supply chain issues, and everything else. You want a balance of different resources and capabilities available to the utility. So it's therapy sounds like a science, but really is it's balance and trade offs. Another important principle, prices need to reflect costs. And this gets back to the idea of monopoly utilities. They have captive customers. In theory, you can go off grid, and definitely some people go off grid and are no longer an electric customer. It's a serious commitment to be able to do that. Vast majority of Vermonters are on grid, and they're captive customers to their electric utility. Yeah. [Scott Campbell ]: Just to highlight one thing about that. Mhmm. I I actually had a Vermont as the so we all used to have all the states used to have, monopoly utilities. Mhmm. The rest of the case, But Vermont is the only one in New Mexico that still has that. Is that right? So Because other states have what they call retail and competition. So they they they separate distribution from transmission. [Ed McNamara ]: That's true to a certain degree. It's called retail choice. We're the only state in the northeast that does not have retail choice. In every other state in the northeast, you can actually say, I don't want Green Mountain Power. I want this company x because they have better marketing, better other things, you know, this kind of stuff. And so you switch on to that provider. The reason I'm saying it's not a hundred percent accurate is that Green Mountain Power is still providing the distribution infrastructure, and so those costs are still paid regardless of what retail choice you have. You're not completely divorced from the cost associated with the underlying monopoly provision of service. You're choosing on choosing more on what specific resources that company has contracted with. [Scott Campbell ]: So other states still have monopoly distribution. It's just there are other sort of features around it that you can that you can select that customers can choose from. Okay. [Ed McNamara ]: Yeah. Most other states or any state that has retail choice, you're gonna see two significant sections of your bill. One is sort of I guess, usually called distribution charge or TMD charge just transmission distribution charge. And that reflects sort of the the monopoly piece of here's how much it costs to provide the wires in this basic service team. And then on top of that is the retail choice, and that does reflect more of the power supply characteristics of a particular retail utility. Okay. And are those rates much do [Scott Campbell ]: they do they fluctuate much more dramatically [Speaker 0 ]: than [Scott Campbell ]: than our rates do over the month? [Ed McNamara ]: Yes. Couple years ago, ten years ago now, the Polar Vortex per month's rates barely budged [Speaker 0 ]: at all associated with that. [Ed McNamara ]: And there was a couple of utilities in Massachusetts that saw fifty percent rate increases because they had short term contracts. That's what you do if you're a retail provider. You if you're not thinking twenty years out, you're thinking sort of five years out at the most. So [Chair ]: Thanks. Yep. [Ed McNamara ]: Alright. Let's see. Oh, so because you have these captive customers, the the rates that these customers pay should really reflect the cost to actually serve those customers. You can include the societal benefits associated with delivery. And here, for example, renewable energy standard, that incurs some costs. And so that is allowed to be mixed in with the retail cost for utility electric service. From several years back, there was a farm methane project. Farm methane projects actually have this really interesting benefit of they reduce phosphorus. And so one utility was making the argument that look at this great benefits of water quality by reducing phosphorus, so we should pay more for this farm methane project then. And we said, no. That's great if you want clean water. There's already mechanisms for doing that. You should not be collecting those costs through electric rates. So that's sort of the distillation of that basic principle. The cost should be within that sector. Another important component too of just utilities and this is the constitutional US Supreme Court has said this. They have to have the opportunity to recover all reasonably incurred costs from rate payers. In other words, you can't tell utility, we want you to do x and we want you to absorb the costs and not pass it on to rate payers. It's just we cannot do that. It wouldn't happen. Everything you tell utilities to do, rate payers pay for. Had this conversation on disconnects as well where people say, oh, it's the utility that's absorbing these costs. No. It's not. All every all of your other ratepayers are absorbing the cost of you not paying your bill. [Chair ]: I'm thinking about California. And what about when utilities haven't done something that they were supposed to do? And there's a huge public liability as well. [Ed McNamara ]: In terms of who pays the cost there, so it should be the utility that actually incurs the cost in that particular because they should have known better. Then it gets into an interesting issue of, are those recently anticipated events? This then becomes just a litigation issue, but all reasonably anticipated events and all reasonably occurred incurred costs should be incurred by the utility. [Speaker 0 ]: Great. So yeah. We're talking about electricity, and you mentioned Green Mountain Power. Mhmm. Is Green Mountain Power the only investor owned utility left in your state? [Ed McNamara ]: Green Mountain Power is the only investor in electric. Otherwise, it is fourteen municipals and two cooperative. So all the [Speaker 0 ]: other electric utilities are nonproactive. They're coming in there. DC and Boston Electric Co op, and that was fourteen munis in Green Mountain Power. Yep. That's correct. And Vermont Gas is investor owned as well. So [Speaker 4 ]: alright. [Ed McNamara ]: Wish there's a better term for this, but cost, cost or pay is basically, whoever adds cost to the system must pay for those costs. We actually just did a report last week as well on electric vehicle rates. And one of the one of the aspects that we were requested to report on is who pays for the upgrades necessary when some of them have enough critical mass of people bringing in EVs. So, generally, if there's an infrastructure upgrade cost, it is and these are, for example, line extension for remote home, that we all know where or transformer upgrades. And I'm thinking it could be anything from a small pole mounted transformer that needs to be upgraded because of somebody's EV to the entire substation because the ski area is putting in, you know, a bunch of new snow guns, something like that. What we have believe almost always required is that the utility look at the revenues from the increased load. So if you're adding a bunch of snow guns, if you're adding UVs, it means you're actually getting additional revenue because you're because you're selling more electricity. And if those increased revenues are greater than the cost of the upgrade, then it's actually all break payers who are benefiting, and therefore, the costs of those upgrades should be socialized. Yes. [Chair ]: Could you talk just a little bit more about line extension for remote homes? So if I'm if I'm the way up and out somewhere, who pays for that? [Ed McNamara ]: Yeah. That is typically the customer who's building the home. And I will also say, because I worked on this almost twenty years ago, it also reflected a policy at the time that you did not want to encourage sprawl. And therefore, to have having that additional cost of providing service was a way of minimizing sprawl. So there is an underlying policy that was sort of mixed in with this general principle about cost cost or case as [Speaker 0 ]: well. Interesting. [Ed McNamara ]: Because it is an interesting question of depending on how far out that remote home is, still increased electric revenues. [Speaker 0 ]: Yeah. [Ed McNamara ]: There's also a tough somewhat complicated formula. If you build a home a mile away from the nearest distribution line, you connect in, you pay the full cost. But then if other people build homes between you and the distribution line over the next five or seven years, those people then contribute the cost and contribute to those costs and reduce the cost for the initial home run. [Speaker 0 ]: Gotcha. Yeah. I could just ask, [Ed McNamara ]: does it matter whether you're on a private road or a public road? It does not. Alright. And if I will do that, PUC proceedings. [Speaker 0 ]: Sorry. Yes. [Chair ]: Can I ask [Speaker 0 ]: one question? [Chair ]: So on the cost causer? Yeah. So you're is it it's just the last guy in for this pain? [Ed McNamara ]: So there's a distinction between on the generation side generation side and load side. Here, what I've been talking about is just load, not generation. On the generation side, it is the last person in pays. And the distinction between generation and load is that load increases the amount of revenues through increased co IR sales. Generation does not provide those additional revenues. It provides [Speaker 0 ]: yeah. Right. [Ed McNamara ]: So it's not [Chair ]: using the system Exactly. For profit. [Ed McNamara ]: Presumably. Okay. [Chair ]: Thank you, madam. [Ed McNamara ]: Great. So I'm gonna first talk about who actually shows up in cases. We have some automatic parties. So, obviously, the petitioner, whoever's asking us to do something, is an automatic party. Department of Public Service appears in every single proceeding that we have. Agency and natural resources is automatic party to every sighting case, so any generation, transmission, battery storage, any of that. And then AG agency in certain cases, sort of a threshold on size and whether or not the primary AGSOILs are implicated. Interveners? Yes? [Chair ]: You're asking what you're about to say. Go. Sorry. [Ed McNamara ]: So sorry. Interveners, this is anybody who's not an automatic party can move to intervene in the case. They can say, we have an interest in the outcome, and therefore, you should let us participate as well. [Chair ]: And what are the criteria for deciding whether someone can anybody be intervener? All you have to do is move and it's automatically accepted, or are there some criteria for saying you don't really have standing here? [Ed McNamara ]: Yeah. It really has to do with what is their interest, and is their interest protected by one of the statutory parties. And that last piece has been a little bit sort of influx over time because, theoretically, between department and, sorry, DPS and ANR, they actually, in theory, do represent all of Vermonters when it comes to environmental issues and public interest issues. But we have generally, if a neighboring landowner moves to intervene sorry. If a landowner who's neighboring or adjoins a generation project, we have typically let them intervene, and it's pretty straightforward. Environmental groups have typically intervened as well because they have interest that are a little bit different and a little bit different than sort of public interest in terms of what the department represents. They're representing their specific take on what the, environment potential environmental impacts of the decision could [Speaker 4 ]: be. So I can [Ed McNamara ]: bring in the rule at some point, but it's exactly to the language. But, generally and I believe that we ought to be somewhat permissive when it comes to intervention, especially when it comes to citing cases as well. I will also say that when you have very complicated rate cases, very few people intervene. Most people just are not that not this not so that's it. Thank you. Right. Municipalities and regional planning commissions. So on any setting case, they actually receive advance notice. So forty five days before the developer files, they have to tell the towns, here's what we're thinking about doing. And the intent really is so that way the towns can talk to the developer. It doesn't always happen. A lot of towns only meet once a month and might not be able to do it. So but that's the underlying intent of the sort of pre file. Yes. [Chair ]: Well, I wanna ask a question about municipalities that have enhanced energy plans. Mhmm. Supposedly, they have more standing. [Ed McNamara ]: It's not so much that they have more standing. It's that they have certain land conservation measures that are contained in their plans, and those are specific to this particular area where we really want protected for these reasons. And these other areas are where we want to see development for of generation. So it's called substantial deference if they have an improved enhanced energy plan. And then there are circumstances. Every regional planning commission has an approved enhanced energy plan, not every municipality. So those towns where there isn't an approved enhanced energy plan, we did due consideration [Chair ]: Right. [Ed McNamara ]: To the planning standards. So [Chair ]: So substantial difference if they have an approved enhanced energy plan due consideration if they don't? [Ed McNamara ]: That's correct. Okay. So municipalities and RPCs also have a statutory right to if they choose to intervene, we will always say yes to them. And they can always file public comments. Adjoining landowners, they also receive this events notice. You can file public comments. They can move to intervene. And then anybody who wants to file public comments or move to intervene. Different categories of proceedings that we have. Cases. So we're a regulatory body that has the powers of the court. And so when we act in contested cases, and this involves all setting projects, rate cases. Actually, large majority of what we do are through contested cases. And there, it's a very formal, it's a court led process. [Speaker 0 ]: We have [Ed McNamara ]: anybody who moves to intervene and anybody who or sorry. Anybody who becomes a party has the opportunity to request an evidential hearing. Decisions have to be based on sworn evidence in the record, and ex parte discussions are prohibited. So I can't talk about any contested cases. Nobody on the commission should be talking to anybody about that case. Process wise, it's fine, but we can't talk about substance. Uncondescended cases, we've used this a lot for sort of investigations or to understand specific issues. It's much more informal. We typically do this through workshops or in comments, and there's no ex parte prohibition on uncontested cases or on rule makings. So clean needs standard, example of the rulemaking, a little bit different than normal in terms of legislative requirements or approval required. But we also have done rulemaking on interconnection, net metering, renewable energy standard. Typically, eighteen months process, and we have to follow the Administrative Procedures Act and secretary of state requirements associated with rule breaking and actually also the APA when it comes to contested cases as well. Mhmm. [Scott Campbell ]: That's a question on that. And decisions that the commission are final. [Ed McNamara ]: Decisions that are final and capable to the springform. So it's very different than I think it's very different than other situations where somebody can't pay with the environmental court and then the environmental court is the Supreme Court. We also get significant deference at the Supreme Court in turn when it comes to areas of our expertise. So citing anybody who receives authorization to site generation or transmission receives what's called the certificate of public goods saying that this project actually promotes the public good of the state. Our view is environmental, so some of the act two fifty criteria are actually incorporated. We look at the aesthetic impacts, including analysis that act two fifty uses as well. We also look at the impact on the electric system, and I'll get into a little bit. For some projects, we look at the impact on repairs as well. Yes. [Chair ]: Is that the service objective art, or do the different criteria have is there, like, a point system? Do do environmental weigh more than aesthetic? Does this like, how do you guys do this? [Ed McNamara ]: It's a great question. So overall, we have to find that the project promotes the general good. And then there's and certain criteria, it says the project may not or cannot have an undue adverse effect on some of the environmental criteria. It cannot have an undue adverse effect on systems and reliability. So if we find the project does have an undue adverse effect on aesthetics, for example, we're gonna say no. Or if it's gonna have an undue adverse effect on system stability, we'll say no. But, generally, the public good sorry. The public good piece does allow us to do a fair amount of balancing as well. It could be that a project has some significant negatives, and the overall societal benefits outweigh those specific negatives. In theory, we don't very often do that. Yeah. So what happens when [Speaker 4 ]: your assessment of aesthetics are different than, like, the local folks who have approved the project at the local level? Yeah. Not that that's ever happened, [Ed McNamara ]: theoretically. Yeah. This is the we we're the ones who decide what the aesthetic impact is rather than for example, the municipality might say, we think this is a terrible idea and it has terrible static impacts, and we have full authority to say, that's great. We don't agree with you, [Speaker 4 ]: and we're approving the problems. And [Ed McNamara ]: vice versa? And vice versa. Yep. [Speaker 4 ]: That's the way the statue is constructed. And to to get to Jay Roman's question, is there something written down what the aesthetic criteria are, or is that just subjective based on, you know, who's on the commission at the time? [Ed McNamara ]: There's something called the Gucci analysis, which lays out the steps for aesthetics review. There's something that Act two fifty, I think, adopted that test, the QueeChi test. QueeChi like the like the town. Exactly. I believe it was nineties. Nineteen nineties was when they adopted the Gucci test. And it looks at first whether there's an adverse effect adverse aesthetic effect to look at basically the fit within the the context of where what the what the project will look like within the existing context of what the visual environment looks like at that particular moment. Mhmm. If you find that it is adverse, then you start looking at, do they take all reasonably available mitigation measures? Is it consistent with the land conservation specific land conservation measures of the municipal and regional planning commissions. And because I'm on the spot, I forgot. Oh, is it shocking could it be shocking and offensive to the average person? [Speaker 4 ]: And that's the one that [Ed McNamara ]: the objective that's I cannot say what the circuit is, but that is applied equally by every single person who's ever used the Cuichetes. Yeah. Okay. Thank you. Alright. Another important thing about siting, the entire siting construct was actually developed a long time ago back when the only projects developed was developed by these surveys. And I mentioned earlier that we're one of the few states that regulates siting for every single generation project. Most other states, including ones who have retail choice, they decided to move away and actually have local zoning for a smaller scale projects. And the smaller scale depends on individual state. So so some small scale renewable generation is conditionally exempt from some of the criteria. Not the environmental or the system stability, but the there's criteria about is there a need for this particular project? Is this project providing economic benefits to the state? Sorry. I probably have this on the very next. And that's essentially because we have standard offer program. If their project was approved under a standard offer program, we're not gonna relitigate the standard offer program every single time a project comes in. We basically say, this project came in under an approved program, so we're not gonna look at economic benefit. We're not gonna look at the rates because the standard offer program set the rates. We're not gonna look for need or look at need. So that's some of the by by the caveat about certain small scale renewable generation doesn't necessarily have to tick every single box. Just reflects the underlying policy we have for why we want specific small scale renewable. Within the energy setting, we actually have a couple different things. We have some streamlined processes. We have full two forty eight processes. When we have a full two forty eight, it typically involves, especially large scale ones, served directly by the commission. We do a site visit, public hearing. We use almost always have evidentiary hearings, foreign testimony, cross examination of witnesses, all that. Smaller projects are typically able to with their limited size and scope, the review is quicker. And so the next point here, modify the review on certain criteria. I already talked about that. And then for net metering, recognizing that a lot of these projects are just put on somebody's roof. We've done it in a way that's essentially a ten day registration. Somebody goes online and puts a form, and they get a registration saying they're allowed to build on their roof for a very small scale. And there's ten days for the utility to object or for tiny vendor to to object. [Speaker 0 ]: So if somebody's gonna put a rooftop system on their neighbor to come out and take issue? [Ed McNamara ]: Yeah. I don't think I've ever seen that be successful. No. And, actually, I'll I'll I'll double check and make sure that the joining line owners can object to rooftop solo. I believe that, theoretically, it's possible. I don't think I've seen it, though. [Speaker 0 ]: I don't remember receiving notice, but I bought it. But I'll check into that. [Chair ]: Five minutes. Sorry. I've [Speaker 4 ]: No. No. Take your time. [Chair ]: The five of this committee, we should be allowing more time for everything. It's it's me. I'm part of the problem. So that's my another questioner. [Ed McNamara ]: Energy efficiency utilities. Efficiency Vermont. Burlington Electric Department has their own efficiency. This is essentially back in the late nineties. We decided that electric heat this is under the rubric of least cost planning. Utility should be providing energy efficiency services, and that's largely because back then, load growth was increasing significantly. As you increase load growth, it means you have to build out your transmission and distribution structure. If you implement cost effective energy efficiency, you minimize the need to build out the system, and therefore, you reduce the overall cost of the system. Problem was that you had actually, back in the late nineties, it was close to twenty something utilities. And so late nineties was consolidated to third party provider of energy efficiency, and this is how efficiency came about. Talked about this a little bit last week. Funded through energy efficiency charge. Every three years, we do a demand resources proceeding. We review the the potential study prepared by, usually, Department of Public Service, might be efficiency Vermont nowadays. Look at what is all cost effective energy efficiency out there. We then set a budget and quantitative performance indicators. We tell the efficiency Vermont, you have to achieve x number of megawatt hours savings. You have to achieve this portion within low income households, like, these kind of things reset clear parameters for them. Energy efficiency charge has to be trued up on an annual basis. This just reflects the fact that electric load just varies every single year depending on weather. It's a three year cycle for the budget and the quantitative performance indicators and regular reporting as well. So rate case is a standard that is used all across the country and federal level. Rates have to be just and reasonable. Again, this isn't exactly the most concrete standard out there, but it provides a lot of flexibility. Also, different customer classes pay prices that reflect the cost of serving those kind of customers, which is why you have residential rates and then commercial and industrial. A large industrial user uses significantly more kilowatt hours than a residential, and therefore, some of their infrastructure costs are actually lower. So they typically have a lower rates than residential. We're also starting to see flexible and managed loads become their own almost customer classes. So EV rates, in particular, where Green Mountain Power will manage the charging of your electric vehicle. You get decreased rates if you just pay in that program only for the kilowatt hours associated with charging with it. I'm just gonna skip over traditional and alt reg. It's getting in the weeds. I do wanna know, break cases are very time intensive for utilities. Specifically, for example, Hyde Park is one of the smaller utilities. If we open an investigation into Hyde Park, that can actually cause an upward shift because now they're hiring lawyers doing everything else. Very different than PEC or Green Mountain Power. They actually have the capability. I'm not saying they love having their cases, but it's a differential impact. And then rulemakings, we just we have priority to initiate rulemakings, unlike a couple other agencies where they have to be told, you need to do a rule making of x, y, or z. Somewhere in statute, I didn't find it this morning. It's just PUC may do whatever rules it needs to, you know, effectuate statute. So I mentioned earlier Administrative Procedures Act, separate administrative state requirements, and we have a little over a dozen, probably at least eighteen different rules at the moment. [Speaker 0 ]: So lots of rules down there. Yeah. [Scott Campbell ]: Does PDC have any jurisdiction over the the KWH rates of EV networks. Not not not not through utilities, but through other companies. ChargePoint and I don't know. [Ed McNamara ]: Yeah. That's a good one there. It's a great question. I'm hesitating only because there is a bill maybe five years ago that specifically talked about the state's jurisdiction over these sort of third party charges and said that we ought to allow competition, I believe, limited to [Speaker 0 ]: some [Ed McNamara ]: degree. But those customers are still those ChargePoint and others are still paying Green Mountain Power of the electric utility for their rates. So presumably, there is a tariff in place for those third party chargers. [Scott Campbell ]: Well, yeah, what I remember from a few years ago is those companies were not allowed to charge by the kilowatt hour. They had to charge by the by the hour [Ed McNamara ]: or something like [Scott Campbell ]: that because charging for a kilowatt hour was restricted to regular utilities. Yep. So that that we did that change, but I don't remember what happened as far as the rates, whether there's any you have any jurisdiction over the rates. [Speaker 0 ]: Well, we have sorry. [Ed McNamara ]: We have jurisdiction over the tariffs that are offered by the utility, and the tariffs include the tariffs that might be specific to a third party charging station, like, for the owner, like, a ChargePoint. [Scott Campbell ]: What ChargePoint or whoever adds a bunch of that? [Ed McNamara ]: Oh, I'm sorry. I'm sorry. We do not have any jurisdiction over what ChargePoint charge carriers for their customers. Yeah. My apologies. Is anybody? I don't believe so. Yes. [Chair ]: I have a question. Yes. [Ed McNamara ]: Yep. The efficiency charge, is it uniform throughout the whole state? Look, I'm residential. Burlington paying the same rate on paying. So because Burlington is not part of efficiency Vermont, they're the only carve out out of the entire statewide efficiency Vermont program. So city of Burlington electric department buys their own services. But otherwise, outside of Burlington, everyone else pays the same energy efficiency charge. And that's and Burlington pays an energy efficiency charge as well. Those folks do. It's just not typically the same as efficiency. [Chair ]: I got it. Okay. I'm sure we will see you here again. Thank you so much for coming. Folks, follow-up with any questions, and we have to be in the pavilion at two thirty.

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